XRP’s $ 4 level of Call options determined this week significant size operations were recorded. According to the data provided by Amberdata, one million contracts of the 4 -dollar Call option, which will be expired on December 26th, changed hands through block transaction on Monday. It was stated that these contracts, each of which is 1,000 XRP in the Deribit Stock Exchange, were written by a large -scale user.
Intensive mobility in the option market
This was observed despite the decrease in the XRP price. Block operations in the option market are generally defined as large and specially negotiated operations. At the end of the transaction, the agreements are listed on the stock market. The $ 4 Call option is known as an option created by the expectation that the XRP will be above this level until the relevant date.
However, according to experts, this density in the market may not be caused by the expectation of price increase. This large process is considered a Covered Call process against existing XRP positions. Covered Call stands out as a strategy that is supported by the assets of investors and limits the expectation of a certain level of price movement.
Comprehensive Covered Call Strategy
The use of this strategy includes the Call option at a price above the current level on the amount of XRP of the investor. Thus, the investor is trying to generate additional income from the option premium. In contrast, it is affordable to the limited earnings in a possible price rise.
Market experts say that the recent block transaction is probably part of a Covered Call strategy. Deribit Asia Business Development President Lin Chen made the following statement:
“I am carrying out the estimation of a large investor Covered Call.”
The Covered Call strategy is usually in demand among BTC investors. In the last two years, the increasing preference of this strategy has led to a stable decrease on implyed volatility. For investors, the main motivation stands out as the desire to generate additional income on the existing asset.
Latest situation in XRP price
The price of XRP was withdrawn to $ 2.94 on Monday. This decrease is considered part of the decline in the general crypto currency market. Then the price of XRP was balanced slightly above $ 3. According to Coindesk data, prices were over 2.6 dollars last month to break their record.
Experts think that the relevant block transaction is realized not with the expectation of rise in the market, but rather to increase the return of the asset at hand. It is also stated that a safe approach in the markets stands out in the background of the transaction. Market makers continue to support the liquidity and neutral price formation of the market with such transactions.
Responsibility Rejection: The information contained in this article does not contain investment advice. Investors should be aware that crypto currencies carry high volatility and thus risk and carry out their operations in line with their own research.
